American novelist Upton Sinclair once said: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.” For physicians today, the converse is also true: it's necessary to understand the concept of a work relative value unit (wRVU) in order to understand how you are being paid. And for those who are looking for a change, that knowledge is essential to compare one employment opportunity to another.
In the past, physician compensation was largely derived from volume-based metrics such as the number of patients seen, procedures performed, or the amount of revenue billed or collected. (Straight salaries were sometimes used as well, but those have become less common.) Over the past five years, however, the use of the wRVU as a metric for determining physician compensation has doubled, and it is now the most prevalent compensation methodology, according to Merritt Hawkins, a physician search and consulting firm.
RVUs form the infrastructure of the Medicare reimbursement system. Each Current Procedural Terminology (CPT) code has RVUs assigned to it, which, when multiplied by a conversion factor (CF) and a geographical practice cost index (GPCI), creates the compensation level for a particular service. RVUs are further divided into three elements of patient care: physician work RVUs (wRVUs), intended to reflect the relative level of time, skill, training and intensity required of a physician to perform a certain level of service; practice expense RVUs — which address the costs of maintaining a practice including rent, equipment, supplies and non-physician staff costs; and malpractice RVUs — which represent payment for the component of professional liability expenses.
The RVU system is far from flawless, and has both proponents and detractors. Neurology Today spoke to neurologists in different practice settings about how their compensation system works and what they like and dislike about it.
Neurologist Richard E. Popwell, Jr., MD — member of the AAN inaugural Emerging Leaders Forum, a new, competitive program designed specifically to cultivate talented, highly motivated individuals as future Academy leaders — has given a great deal of consideration to the subject of RVU-based compensation in his role as chairman of the executive council at Bozeman Deaconess Health Group, a multi-specialty practice in Montana.
“Most providers have very little insight into how the RBRVS (resource-based relative value scale) originated, how wRVU values were established and modified over time, or how important coding and documentation are in optimizing appropriate capture of physician work (wRVU),” he said.
“Unfortunately, the majority of our colleagues are reluctant to seek education on coding and documentation, resulting in frequent down-coding, either through provider-assigned charges or subsequent equivalent adjustments by professional coders,” he observed. This lack of understanding often translates into significant losses in potential revenue, especially in wRVU-based compensation plans, he noted.
“Only when providers take the time to educate themselves about RBRVS and wRVU values can they truly understand the importance of coding and documentation where every component of a note literally translates to another potential dollar in revenue,” he said.
The model developed at Bozeman over the last few years targets initial compensation and productivity goals at approximately the 50th percentile of averaged data from at least two reputable annual surveys — currently the Medical Group Management Association (MGMA) and the American Group Management Association. After a typical salary guarantee expires, compensation is adjusted to reflect true productivity.
“If a provider falls at 42 percent of wRVUs for 2012 per the survey data, his or her salary is adjusted down to the 42 percent survey equivalent salary for the following year,” Dr. Popwell explained. A 10 percent reserve is held back each year, but paid back to the providers in quarterly installments, assuming in a given quarter they exceed 90 percent of their projected productivity. Providers exceeding 100 percent of their target are paid a quarterly bonus calculated by multiplying the wRVUs over their target by an internally calculated, specialty-specific wRVU converter, which is typically very close to equivalent survey data.
Terry D. Fife, MD, a member of the AAN Guidelines Development Subcommittee and Payment Policy Subcommittee, reports that in Arizona both the University of Arizona and Barrow Neurological Institute have recently transitioned to wRVU-based payment models. “Both institutions are trying to align salaries with work productivity and revenue using wRVUs — annual wRVUs need to be between 4500-5500 to get up to the salary range of $240,000, depending on the overhead structure,” he said. (According to the 2012 MGMA Physician Compensation and Production Survey the median number of physician work RVUs for neurology in 2011 was 4862 and the median compensation was $254,836.)
Dr. Fife is concerned that a pure RVU model does not account for the quality of patient care or for the benefit of regionally or nationally recognized subspecialty expertise. “Some studies suggest that an RVU-based salary model can be slightly more favorable than most prior models for younger physicians if they work hard,” said Dr. Fife. “But the formula discounts the more experienced people who do not get more wRVUs because they are recognized for their expertise regionally or nationally. There's also no accounting for quality, something which is quite hard to measure using billing and coding data.
“Whereas I had in the past selected for my clinic only the most difficult cases that had been seen by neurologists and other specialists without an answer,” he continued, “the new model encourages me to see the easiest cases and minimize those that are especially complicated or patients that appear likely to call frequently, ask many questions, or suffer from severe anxiety accompanying their symptoms.” Dr. Fife worries that ultimately, this may leave some patients unable to find even academic specialists who want to spend time on complicated cases.
Richard L. Barbano, MD, PhD, chief of the movement disorders unit at the University of Rochester Medical Center, chief of neurology at Rochester General Hospital, and member of the AAN Guidelines Subcommittee, was salaried with little oversight regarding his provider productivity except as revenue generation (especially if budgets were in deficit) until two years ago when the department attempted to transition to an RVU model. The salary was still full (the negotiated total), but an incentive was added to encourage people to go “above and beyond,” Dr. Barbano explained. “Although there was some concern about seeking higher wRVU procedures, the unintended consequence that bothered me more was that in some ways the atmosphere went from a ‘team’ approach to a ‘me’ approach,” he said. “The danger was having faculty starting to look at their time as an ‘a la carte’ menu and wanting to know: ‘how many wRVUs do I get for this?’ (for teaching, arranging call schedules, mentoring, etc.), rather than ‘what do we need to do to move this mission forward?’”
Fortunately, some academic departments allow for a variety of non-patient activities to count towards the RVU burden. Bruce H. Cohen, MD, director of pediatric neurology at Akron's Children's Hospital and chair of the AAN Coding Subcommittee, explained that in their system there is a base salary that requires 4000 RVUs based on a 36-hour work week (proportionately lowered for those doctors who work part-time). “We negotiate academic time and modify down those RVUs such that if a doctor performs 10 percent research, he or she is required to generate 0.9 × 4000 RVUs or 3600/year, as long as their research goals — which are relatively broad for the first few years of their career — are met.” Any RVUs generated above the base are paid as a bonus at $25 per RVU — the maximum bonus is 20 percent of total base salary — as long as the physician also meets basic standard duty requirements, such as attendance of meetings and completion of quarterly time forms, for example. If research goals are met, those accomplishments count toward the agreed upon a portion of the bonus.
“We also give wRVU ‘credit’ to serve on some committees (once a month for an hour) or for taking on special projects. For example, a Six-Sigma office redesign project that I sat on required two hours of weekly participation; it was equivalent to two hours seeing patients.” The same applies for the time spent running the neurology program for the pediatrics residents. “Thus far, we have not penalized those not making their RVU quota as long as they remain good citizens,” Dr. Cohen said.
Although he believes that this makes for a reasonable system, there is one inherently unfair aspect of the arrangement that has been difficult to mitigate. One of his satellite clinics had a 30 percent no-show rate for patients last year, and this had an impact on the physicians' ability to generate their expected RVUs. Although the no-show rate has been reduced to 10 percent this year, the situation has some people double-booking patients in order to be certain that they meet their productivity expectations.
Another potential pitfall in the system is that wRVU-based plans may or may not appropriately compensate physicians for procedures they perform independently without the assistance of a technician, Dr. Popwell pointed out.
“For example, it is very appropriate that a neurologist is only compensated for the physician work component of interpretation of an EEG, especially since they are not performing the procedural work,” he said. “Most of the time, nerve conduction/electromyography studies, deep brain stimulation or vagal nerve stimulation programming, and chemodenervation are performed by a neurologist without the assistance of a technician. Unfortunately, wRVU-based compensation plans, by design, do not assign the technical components of these procedures to the physicians performing them, but the employer still gets to bill for the services,” he noted.
“Some physicians will have to decide if they want to work harder to meet the new RVU expectations or perhaps accept reduced pay in the interest of providing quality care for their patients,” Dr. Fife predicted, suggesting that a portion may choose to opt out of Medicare altogether and see a smaller number of cash-paying patients. The latter may have appeal as it also averts most of the future upheaval: electronic prescribing, electronic health record debacles and expenses, physician quality reporting system mandates, RAC audits, new payment models such as accountable care organizations, low reimbursements, and sustainable growth rate uncertainties.
“For those who are in the second half of their career, we bemoan the changes and the effects on income, but we can — and likely will — have to get used to lower pay,” Dr. Fife reflected. He worries that those coming out of medical school with substantial student loan debt may find themselves burdened by debt until well in to their mid-40's — just in time to get hit by the cost of their own kids' college expenses. “Only time will tell if the gradual pay reduction affecting cognitive specialties like neurology will influence how many of the best and brightest decide that medicine, with the costs of education and training, and the time and responsibility, is ultimately ‘worth it.’”
Dr. Cohen agrees. “Those coming out of training are doing so often with the burden of what amounts to a home mortgage on their backs,” he said. “I borrowed 100 percent of my tuition at a private university medical school and graduated with a $36,000 debt, which was 150 percent of my intern's salary, whereas now graduates are strapped with a $200,000 debt, 400-500 percent of an intern's salary.” Quite a difference, he concluded.
Dr. Avitzur, a neurologist in private practice in Tarrytown, NY, holds academic appointments at Yale University School of Medicine and New York Medical College. She is an associate editor of Neurology Today and chair of the AAN Practice Management and Technology Subcommittee.